Correlation Between Ford and Lazard Equity
Can any of the company-specific risk be diversified away by investing in both Ford and Lazard Equity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Lazard Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Lazard Equity Franchise, you can compare the effects of market volatilities on Ford and Lazard Equity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Lazard Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lazard Equity.
Diversification Opportunities for Ford and Lazard Equity
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Lazard is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lazard Equity Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Equity Franchise and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Lazard Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Equity Franchise has no effect on the direction of Ford i.e., Ford and Lazard Equity go up and down completely randomly.
Pair Corralation between Ford and Lazard Equity
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.33 times more return on investment than Lazard Equity. However, Ford is 2.33 times more volatile than Lazard Equity Franchise. It trades about 0.0 of its potential returns per unit of risk. Lazard Equity Franchise is currently generating about 0.0 per unit of risk. If you would invest 1,053 in Ford Motor on November 29, 2024 and sell it today you would lose (124.00) from holding Ford Motor or give up 11.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Lazard Equity Franchise
Performance |
| Timeline |
| Ford Motor |
| Lazard Equity Franchise |
Ford and Lazard Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lazard Equity
The main advantage of trading using opposite Ford and Lazard Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lazard Equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lazard Equity will offset losses from the drop in Lazard Equity's long position.The idea behind Ford Motor and Lazard Equity Franchise pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lazard Equity vs. Hennessy Technology Fund | Lazard Equity vs. Firsthand Technology Opportunities | Lazard Equity vs. Red Oak Technology | Lazard Equity vs. Towpath Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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